Identity theft is one of the fastest growing crimes globally. Identity theft is one of the major reasons for bad credit and lack of access to financing. Both credit freezes and fraud alerts can be used to protect your access to credit. However, each method is used for different purposes and in this post you will learn the difference between the two.
Fraud alerts are typically alerts to any party going through your credit file. It is a signal to any credit grantor that you are or may have been victim to a suspicious activity. Fraud alerts enable credit grantors to take extra caution in accessing the legitimacy of a credit request. The credit grantor will contact you before approving new credit.
Types of Fraud Alerts
Initial Fraud Alert: This alert is effective for a period of 90 days and can be placed if you deem that you are at a risk of being a victim. Once the alert is in place, any credit activity request on your name must be authorized by you.
Military/Active Duty Alert: This alert can be undertaken when you are going on active military service away from your usual station. The alert is similar to initial fraud alert only that it is effective for a whole year.
Extended Fraud Alert: This alert can be placed when you realize that you are a victim of fraud or discover evidence of the same. It remains effective for seven years and creditors have to verify all requests by contacting you.
It is considerably easy to place a fraud alert as compared to a freeze. You just need to call a credit agency and request them to place a fraud alert on your file.
A security freeze just as the name suggests, enables you to keep away information on your credit file from third parties. This means that for lenders to get access to your file, you have to give them permission through a process known as “thawing” your file using a code. It is safe as it keeps identity thieves from opening new accounts in your name.
However, you should note that even with a freeze, certain situations will still allow for your file to be disclosed. For example organizations that you are in business with such as you telephone service provider, credit card provider, or mortgage. You will also still be in the list for offers of prescreened credit. In some states even landlords, insurers, and potential employers can access your file.
To put in place a credit freeze, you need to make a request in writing to all credit reporting agencies using a certified letter. In the letter include your social security number, name, and address. You will then be issued with a pin number to access your file.
Freezing or unfreezing credit may take some time and should only be undertaken if you won’t be seeking a new job, moving out, or applying for credit in the near future.
Identity theft occurs when someone uses your identity for their own financial gain. This can especially be a sticky situation when the identity thief is done by a family member. You will feel betrayed and violated leading to trust issues. However, you may find it hard...read more
Your credit rating is important for your financial health. With a bad credit score, you will be subjected to high interest rates whenever you take a loan or borrow. It may also affect your expenses such as insurance, the result? Unfortunately subjecting you to higher...read more
Establishing credit for the first time may be tricky. If you do not have a credit history, it will be difficult to get a mortgae, credit card, or even a loan. So how do you show a repayment history if you can’t get credit? To have a credit score, you should have an...read more
What is a credit report? When you apply for credit, the lender reviews your credit report before approving your application. The three major credit reporting agencies are Equifax, Experian, and TransUnion. These agencies, which are also called “bureaus,” collect and...read more
One of the most frequent questions our clients at Optimus Credit ask us is how long do negative items report on your credit report? Below is a list of various accounts and how long they can remain on your credit report. Delinquencies (30 – 180 days): Can remain seven...read more
Most of us enjoy Cyber shopping. Some of us do it to avoid crowds, some to save gas, and some for the convenience of shopping at any time of day or night. When you’re ready to make an online purchase, pay close attention to the information you need to enter. Should...read more
1. Your Credit Report is Different From Credit Scores Credit scores are calculated using the information reported on your credit reports, which includes details of your credit accounts both open and closed, balance inquiries, payment history, how often you apply for...read more